Hague backs £10bn spending cuts

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William Hague and his Shadow Cabinet drew up new proposals to cut Labour's spending plans yesterday in an attempt to bolster their campaign to promise tax cuts at the general election.

William Hague and his Shadow Cabinet drew up new proposals to cut Labour's spending plans yesterday in an attempt to bolster their campaign to promise tax cuts at the general election.

Mr Hague is backing demands by Michael Portillo, the Shadow Chancellor, for shadow ministers to produce proposals to reduce Labour's plans by about £10bn. Mr Portillo is said to be worried that Tory frontbenchers "are keen to spend money but not come up with ideas for how to save it".

Mr Hague is expected to announce some of the Tories' new thinking today at the close of the two-day Shadow Cabinet summit at a country hotel near Aylesbury, Buckinghamshire.

A Tory source said last night the party had already identified savings of £5bn, including £3bn on welfare and between £1bn and £2bn on Whitehall's running costs. "We are now looking for a significant advance on that," he said.

Mr Hague said yesterday that fuel duty will be a "prime candidate" for tax cuts. Mr Portillo has blocked demands by John Redwood, head of the party's parliamentary campaigns unit, for a promise to cut petrol by 5p per litre.

The two-day session is expected to delay the announcement of the Tories' proposed tax cuts until much nearer the election, in line with Mr Portillo's wishes.

The Shadow Cabinet discussed a document drawn up by Mr Hague and Mr Portillo, identifying areas for "significant" tax cuts. Shadow ministers were expected to identify areas where Labour spending plans would be protected, such as health, and where they would be "revised", according to Tory sources.

A study by the accountants Chantrey Vellacott DFK last week suggested the Tories would need to find £12bn of savings to honour their pledge to limit the rise in government spending to below the growth in the economy.

Andrew Smith, the Treasury Chief Secretary, said: "Unless the Tories come clean with the British people and say which services will be axed as a result, they will continue to have no credibility on matters of public spending and taxation."

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